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The Opportunity Apple Just Created For Publishers

Apple did book big book publishers a favour some time ago when, by giving the big six leverage over Amazon (with the launch of their new ebook platform iBooks), they enabled those large publishers to enforce Agency pricing for ebooks.

That gave the big six the power to set prices and extract a higher share of the revenue from their sales then had been the case for print books. It was a major moment in the development of the ebook market and one that has received a lot of attention and, at least from within the industry, a lot of praise.

Apple’s more recent decision to enforce tough rules on in-App sales of content has been less popular. It has forced Amazon, Google, B&N and Kobo among others in publishing and other creative industries, to change their Apps to disable links to their ebook or content stores. Further it made it impossible for an ebook retailer to sell an ebook through the Apple in-App purchase system without giving 30% to Apple. Nasty eh?

The opportunity this created and that everyone missed , even me (till this weekend when it dawned on me), is for publishers to go direct to consumers and launch their own apps selling ebooks to readers.

Think about it, ebook retailers cannot make money from selling ebooks via Apple’s in-App sales because their margins simply won’t stretch that far. In the case of Agency titles they would be losing money, even on self-published works they might be losing money. However, a publisher, selling direct through their own app, or even a branded app in partnership with a number of other publishers in a given genre, could easily afford the 30% charge and even an administration charge too so long as it was kept low.

Apple has shifted the economics of the App-economy to disintermediate the distributors and empower the content producer. Sure, in doing so they have gained power and revenue potential for themselves, but they have created an opportunity for a savvy publisher who has a brand that readers identify with.

It’s interesting that no-one has written about this yet. I suspect that might be because some of them are working on just that kind of app …

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29 comments

That window has closed. They had a chance to band together like TV did with Hulu to combat YouTube. If each publisher releases its own app now, it’d confuse people and people would wonder what iBookstore is for.

I agree, Eoin. An app is a relatively simple thing to produce for most books. The challenge is producing text worth reading and having a strong marketing machine to find customers for it. With the huge growth of Android smartphones, for example, there is a viable platform alternative to Apple iBookstore.

It wouldn’t matter terribly if titles were promoted under strong brands, perhaps most readers don’t know the publisher, but savvy marketing would enable the publisher to make sure those readers knew the brand or genre they liked!

Dark Horse already went this route, building their own app, and its basically Comixology’s angle with just about everyone else. It’s also Electric Publishers’ sales pitch to small presses. The key is publishers need to have a known brand for an app to be viable, and have the marketing muscle to get it in front of readers. That’s a lot of effort that’s far more likely to be directed towards iBooks itself, not circumventing Apple.

Dunno, people already use multiple apps, and have multiple folders. Now that organization is possible in iOS, readers might not care where their book comes from. If publishers are offering sales direct, and can sweeten the deal (extra material? I mean, I don’t ever want that, but perhaps others do) it’s not crazy that readers may have 6 or 7 reading apps they switch between, if they’re dedicated and all. What does one store really add, aside from one less level of organization?

Publishers would then have to become software developers as they create and maintain their own DRM. They can’t even license an (extremely) expensive solution that is ACS4 because iOs doesn’t support it.

All the major retailers of ebooks either have their own DRM or license it from Adobe: Google (own and Adobe), Apple (own), Kindle (own), Mobipocket (own and different from Kindle), Nook (own), Waterstones, Gardners etc. (ACS4).

So the choice for publishers wishing to go direct would be: implement a very costly DRM solution which requires high ongoing maintenance costs in perpetuity, or forego DRM altogether.

The issue is fast becoming, not what you WANT to be doing as a publisher, but rather what works, what makes money and what it is SUSTAINABLE to be doing as a publisher. Not having programming and software skills in house or at least readily available will be a deeply problematic issue for publishers very soon, if it is not already.

We were proposing a ‘Publisher’s Portal’ app last year and this is by far the best option to control eBooks, apps and all related properties under one promoted digital roof. My original Publishing Perspective article mentions the portal around paragraph 10/11:

Eoin, very interesting – set me thinking how our Quick Win app template could be adapted – to me, the key (which some commenters above have missed) is that the opportunity is not to create a new reading app (agree that’s not needed) but to create a catalogue wih in-app purchasing – the 30% to Apple is lot less than 55% to Amazon and major bookchains – well-spotted! Brian

Not really that new an idea. I remember discussing this online early in 2010.

Firstly I would opine that the view that Apple did the big 6 publishers such a favour by enabling them to become Agency Publishers is highly debatable. Those publishers raised their prices significantly and this gave an enormous boost to non agency publishers and self publishers whose sales exploded. Agency publishers may be happy, but imho that’s because they don’t grasp the real outcome of their actions.

The prospect of 10 or 20 individual apps from publishers sitting on a users iPad has not gained traction because of the aforementioned fragmentation effect. While some of the really big publishers could possibly persuade readers to use their app. the idea of a user downloading a bunch of apps from minor publishers doesn’t make sense to me. It is comparable publishers opening their own brick’smortar bookshop on the high street. People don’t want to spend time popping in and browsing through a whole series of places to find a read.

However I do believe that cooperative apps from groups of publishers, such as an Indie app, and/or specialist genre apps are a valid concept.

The difference is that between 2010 and now, much has changed in the iOS ecosphere, enough to make what seemed a not really great idea then into an opportunity now.

I’m, as a reader, no fan of Agency. As a big publisher it was a huge benefit. Perhaps, and I would think this myself, it is a double edged sword as you say but if it is, the good edge is still the most attractive element of it to publishers.

As for 10-20 apps I don’t think that is that unreasonable after all many users have several dozen apps. Even if it is unreasonable, those with clear brands or deep content in niche areas have the advantage and as I suggested in my piece, they could easily band together.

Agency provides comfort and reassurance an control to Publishers. Hence the happiness. I believe that they have paid for this satisfaction of control by pumping up the competition and forcing readers to down price and to discover that self published titles are every bit as good as theirs, damaging their business in the process.

The average number of apps downloaded by each iOS user is 60, with about 10 later erased.

Devoting the kinds of numbers you are envisaging to eBooks doesn’t make a lot of sense to me, though as I say above, the principle of going direct to the customer via a joint effort does.

I think you’re correct about Apple. I find it fascinating to watch this play out.
But Amazon faces the same core challenge as Apple: how to keep publishers within the Kindle wall, and paying their 30%+ tithe to Sales-Tax-Free Seattle.

Book publishers, understandably in awe of Apple and the iPad, lose sight of the fact that Apple really isn’t the adversary — Amazon is, followed by Barnes & Noble. The latest figures in the U.S. give Apple still only 10% of the market for ebooks. I don’t see that increasing except for a small class of titles optimized as iPad-only apps.

Odd that “the browser” isn’t mentioned in any of the comments. Surely that’s the big news: Amazon was just forced to undermine its brain-dead & proprietary Mobi format and move out into the world of reading-in-the-browser (which Brewster Kahle has lead the charge towards). The emperor’s lack of clothing have never been quite so easy to spot.

I don’t think we would be seeing 20-30 publisher apps. For most people, it would be the Big Six, plus a few genre publisher apps -in effect another folder.
Another possibility is that the publishers would partner with iBooks, the way the magazine publishers would partner with Apple in its forthcoming Newsstand app. Dunno exactly how that would work-we would need a redesigned iBookstore. But hey, its a possibility.

I think that the App Store should have categories within categories, ie Books would show subject categories similar to a Library. I am pretty sure App Developers in other categories are finding it similarly frustrating. The App Store is a total mess.

Am I being completely simplistic with thus? Readers don’t choose books by Publisher but by subject and author.